Investments

All of the Company’s debt and equity securities are classified as AFS and are carried at fair value. The Company evaluates whether AFS securities are other-than-temporarily impaired (OTTI) based on criteria that include the extent to which cost exceeds market value, the duration of the market value decline, the credit rating of the issuer or security, the failure of the issuer to make scheduled principal or interest payments and the financial health and prospects of the issuer or security.

Declines in the value of AFS securities determined to be OTTI are recognized in earnings and reported as OTTI losses. Debt securities with unrealized losses are considered OTTI if the Company intends to sell the debt security or if the Company will be required to sell the debt security prior to any anticipated recovery. If the Company determines that a debt security is OTTI under these circumstances, the impairment recognized in earnings is measured as the difference between the amortized cost and the current fair value. A debt security is also determined to be OTTI if the Company does not expect to recover the amortized cost of the debt security. However, in this circumstance, if the Company does not intend to sell the debt security and will not be required to sell the debt security, the impairment recognized in earnings equals the estimated credit loss as measured by the difference between the present value of expected cash flows and the amortized cost of the debt security. Expected cash flows are discounted using the debt security’s effective interest rate. An equity security is determined to be OTTI if the Company does not expect to recover the cost of the equity security. Declines in the value of AFS securities determined to be temporary are reported, net of tax, as other comprehensive losses and included as a component of stockholders’ equity.

Interest and dividend income, amortization of premiums, accretion of discounts and realized gains and losses on AFS securities are included in investment income. Interest income is accrued as earned. Dividend income is recognized as income on the ex-dividend date of the stock. The cost of AFS securities sold is based on the first-in, first-out method.

Following is a summary of AFS securities as of September 28, 2013 and December 29, 2012:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(Amounts are in thousands)
September 28, 2013
Tax exempt bonds	$	3,532,904		22,570		13,862	3,541,612
Taxable bonds	1,517,355			9,427		3,611	1,523,171
Restricted investments	170,000			—		86	169,914
Equity securities	728,381			124,729		6,932	846,178
	$	5,948,640		156,726		24,491	6,080,875
December 29, 2012
Tax exempt bonds	$	3,115,963		33,787		2,646	3,147,104
Taxable bonds	1,141,514			17,667		355	1,158,826
Restricted investments	170,000			431		—	170,431
Equity securities	510,613			58,631		12,499	556,745
	$	4,938,090		110,516		15,500	5,033,106

Realized gains on sales of AFS securities totaled $7,516,000 and $25,563,000 for the three and nine months ended September 28, 2013, respectively. Realized losses on sales of AFS securities totaled $2,972,000 and $11,769,000 for the three and nine months ended September 28, 2013, respectively. There were no OTTI losses on AFS securities for the three and nine months ended September 28, 2013.

Realized gains on sales of AFS securities totaled $9,209,000 and $18,986,000 for the three and nine months ended September 29, 2012, respectively. Realized losses on sales of AFS securities totaled $5,722,000 and $11,097,000 for the three and nine months ended September 29, 2012, respectively. There were no OTTI losses on AFS securities for the three and nine months ended September 29, 2012.

The amortized cost and fair value of AFS securities by expected maturity as of September 28, 2013 and December 29, 2012 are as follows:



	September 28, 2013			December 29, 2012
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(Amounts are in thousands)
Due in one year or less	$	840,134	843,991	792,946	797,260
Due after one year through five years	3,650,174		3,663,584	2,725,036	2,755,043
Due after five years through ten years	363,852		356,742	520,800	526,924
Due after ten years	196,099		200,466	218,695	226,703
	5,050,259		5,064,783	4,257,477	4,305,930
Restricted investments	170,000		169,914	170,000	170,431
Equity securities	728,381		846,178	510,613	556,745
	$	5,948,640	6,080,875	4,938,090	5,033,106

Following is a summary of temporarily impaired AFS securities by the time period impaired as of September 28, 2013 and December 29, 2012:



	Less Than 12 Months				12 Months or Longer			Total
	Fair Value		Unrealized Losses		Fair Value	Unrealized Losses		Fair Value	Unrealized Losses
	(Amounts are in thousands)
September 28, 2013
Tax exempt bonds	$	1,057,342		13,857	4,985		5	1,062,327		13,862
Taxable bonds	629,862			3,586	5,013		25	634,875		3,611
Restricted investments	169,914			86	—		—	169,914		86
Equity securities	65,818			5,127	8,542		1,805	74,360		6,932
Total temporarily impaired AFS securities	$	1,922,936		22,656	18,540		1,835	1,941,476		24,491
December 29, 2012
Tax exempt bonds	$	566,914		2,646	—		—	566,914		2,646
Taxable bonds	81,876			355	—		—	81,876		355
Equity securities	209,759			8,878	14,260		3,621	224,019		12,499
Total temporarily impaired AFS securities	$	858,549		11,879	14,260		3,621	872,809		15,500

There are 462 AFS securities issues contributing to the total unrealized loss of $24,491,000 as of September 28, 2013. Unrealized losses related to debt securities are primarily driven by interest rate volatility impacting the market value of certain bonds. The Company continues to receive scheduled principal and interest payments on these debt securities. Unrealized losses related to equity securities are primarily driven by stock market volatility.